Banking Basics
An account is ideal for everyday spending and is often linked to a debit card.
What is a checking account?
The rule dividing your income into the best ratio of needs, wants, and savings.
What is the 50-30-20 rule?
An app that allows users to instantly send money to friends.
What is Venmo, Cash App, Zelle...
Insurance that protects your bank deposits up to $250,000.
What is FDIC insurance?
Studies how emotions and psychology influence financial decisions.
What is behavioral economics?
The optional service a bank provides of loaning money to individuals who spend more money than they have in their account
What is overdraft protection?
Moving money from one bank account to another
What is a transfer?
Tools that let users pay with their phone at checkout without swiping a card.
What is a digital wallet (apple pay, google pay, etc.)
Type of card used that directly takes money from a checking (or money market) account to pay for a transaction
What is a debit card?
Bias which causes people to only seek out information that supports what they already believe.
What is confirmation bias?
Saving tool that offers higher interest rates if you commit to leaving your money untouched for a set period.
What is a CD?
This fund should cover 3–6 months of living expenses.
What is an emergency fund?
This service, offered by most banks, allows users to check balances, transfer funds, and pay bills from their phones, giving them real-time access to their financial information.
What is mobile banking?
The place to contact immediately when one notices suspicious activity on an account.
What is a bank?
An effect that makes people overvalue things they already own.
What is the endowment effect?
Combines savings features with limited check-writing and debit access.
What is a Money Market Account?
It is the objective in collecting money over time. Examples include a phone in the short-term, a car in the medium-term, or house in the long-term.
What is a savings goal?
Banks that don't maintain physical branches, these types of banks can pass the savings on to customers in the form of higher interest rates.
What are online banks?
A fee charged when opted into overdraft protection and spending more than the account balance.
What is an overdraft fee?
The fallacy that leads people to continue with something, just because they’ve already invested time or money in it.
What is the sunk cost fallacy?
Financial institution owned by its members and focuses on community service rather than profit.
What is a credit union?
A phrase describing a household that spends nearly all of its income each month with no savings.
What is living paycheck to paycheck?
Although convenient for splitting bills with friends, this type of app is not appropriate for paying businesses directly for goods or services.
What is a P2P (peer-to-peer) payment app?
Employers sending paychecks directly to employes bank accounts.
What is direct deposit?
The tendency to follow the crowd, even without understanding the decision.
What is herd mentality?